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Harvey Kruse, P.C.

Attorneys & Counselors

1050 Wilshire Drive
Suite 320
Troy, Michigan 48084

Telephone (248) 649-7800

Ask for Dale Burmeister or Jason Mathers or send an email:

Dale Burmeister teaching
seminar on overtime

Overtime Lawsuits Pile Up

A record 7,064 wage-and-hour suits were filed in the 12 month period ending March 31, 2012 according to Seyfarth Shaw LLP. The number of new lawsuits rose dramatically in 2007, and then just kept going up between 2008 and 2012. Settlements have risen, too. Over 100 wage-and-hour cases were settled last year, up from 20 in 2007, according to NERA Economic Consulting. Banks and insurers made up more than 20 percent of the settlements over the past five years, second only to the retail industry. See the article "Trends in Wage and Hour Settlements: 2011 Update," Mar. 22, 2012.

Third Collective Action for Level One Managers Certified as Collective Action Against AT&T

The U.S. District Court in Atlanta has certified another collective action against Bell South involving Level One or First Level Managers. Read the opinion here.

Seventh Annual Review of Workplace Class Action Litigation Issued

The Seventh Edition of a comprehensive survey of class and collective action cases by the Chicago based law firm of Seyfarth Shaw has been released. According to the report, "in 2010, the value of major employment discrimination class action settlements increased four-fold in 2010 over 2009 and the top ten settlements of wage & hour, ERISA, and governmental enforcement class actions increased to $1.16 billion, the highest amount ever." Here is a link to the summary or preview.

Second Collective Action for Level One Managers Certified as Collective Action Against Phone Company

On November 19, 2010, a second conditional collective action was certified by a federal court against a phone company for overtime benefits than may be payable to so-called "Level One Managers."

It is claimed that these “Field Managers regularly work 50, 60, or even 70 hours per week, but are not paid overtime wages” and “they are required to answer calls and emails at night, are often asked to come in on weekends, and every few weeks are required to work a ‘duty shift,’ during which they are on call for 24 hours a day for seven days.” They also assert that they “receive no additional compensation for this time, however, because Pacific Bell and AT&T claim that Field Managers fall within the ‘executive’ and ‘administrative’ exceptions to FLSA’s overtime requirements.”

The Pacific Bell case in California follows on the heals late last year of a similar collective action certification in Connecticutt for "Field" or "Level One" Managers. Here is a copy of the 11 page Court Order.

Top Overtime Settlements in 2009

The top 10 private wage-and-hour settlements paid or agreed to in 2009 under the Fair Labor Standards Act totaled $363.6 million, a 43.9% increase from 2008, according to an annual report released this month. The 575-page report, Annual Workplace Class Action Litigation Report, 2010 Edition, by Chicago-based law firm Seyfarth Shaw L.L.P., analyzed 715 cases in federal and state courts last year.

AT&T Subsidiaries Sued in Georgia and California for Unpaid Overtime on Behalf of First-Level Managers

According to a press release issued on December 16, 2009, "AT&T, the nation's largest provider of phone and internet services, and its subsidiaries, Pacific Bell Telephone Co. ("PacBell") and BellSouth Telecommunications Co. ("BellSouth"), have been withholding as much as $1 billion in overtime wages from more than 5,000 of the company's First Level "Managers" throughout the country. That's the accusation at the heart of two class action lawsuits filed today in U.S. District Courts for the Northern District of California in San Francisco and the Northern District of Georgia in Atlanta by the law firm of Sanford Wittels & Heisler, LLP."

U.S. District Court in Conneticut Certifies Collective and Class Action Against Southern New England Telephone (SNET) for "Level One" Managers in Network Services, Installation and Maintenance and Related Areas

On November 4, 2009, U.S. District Judge Janet Hall granted a Motion for FLSA Collective Action and a Motion for Rule 23(b)(3) Class Certification as to all "First Level (or Level One) Managers employed by SNET in the State of Connecticut from June 2004 and thereafter, (1) to whom SNET assigned technicians; and (2) who worked as First Level Managers in departments and areas including, but not limited to, Network Services, Installation and Maintenance, Installation, Maintenance, IM, I/M, DSL, Cable Maintenance, Cable Repair, Installation and Repair (I&R), Consumer, Business, Splicing, Cable Splicing, Loop Electronics (LERT), Digital Electronics Group (DEG), Outside Plant, Network Operations, Construction, Engineering, Construction and Engineering, Local Field Organization (LFO), U-verse, and U-verse Operations, with the understanding that “technicians” is defined as “bargaining unit employees who perform the physical and technical aspects of the job on the inside or outside plant or at a customer’s premises.” The Rule 23 class is the same, but the claims date back to
June 2005.

To read a copy of the Court's 26 page opinion, click here.

AT&T Sued in Overtime Case on Behalf of Sales Consultants

On December 10, 2007, an overtime lawsuit was filed against AT&T, Inc., AT&T Corp. and BellSouth Corporation in the United States District Court for the Northern District of Georgiafor allegedly violating the federal Fair Labor Standards Act by refusing to compensate Sales Consultants, Sales and Service Consultants and Sales Associates, and those similarly situated, for all their time worked. The suit was started by a current Universal Sales Associate and a former Sales Consultant and alleges that they were denied pay for time worked before and after theirshifts and during meal and rest breaks. A large portion of this time wasspent booting-up computers, logging into computer systems and performing customer

"Surge in wage suits has courts on overtime"

Star Tribune
October 6, 2007
By David Phelps

The explosion in wage-and-hour lawsuits is readily apparent in the cramped Dakota County courtroom where the overtime and break policies of retail giant Wal-Mart are at the center of an intense legal battle with nationwide implications.
The room is lined with enough banker's boxes of files and three-ring binders to make an Office Max proud. There's a reason for all the paperwork: Potentially millions of dollars are at stake.

A Pennsylvania judge last week added $62.3 million in punitive damages to a $78.5 million compensatory award for Wal-Mart workers in that state who were made to work "off the clock" or during their rest and lunch breaks.

The Minnesota Wal-Mart case seeks $27 million in actual damages for 56,000 employees on the basis of similar allegations of overtime violations. Punitive damages have yet to be addressed.

The Wal-Mart litigation is among the more high-profile examples of a wave of wage-and-hour litigation that has swept through corporate America over the past five years.

Most recently in Minnesota, U.S. District Judge Michael Davis in Minneapolis granted class-action status to a lawsuit by call center employees for Qwest Communications.

The suit contends that workers were required to do unpaid work before and after their scheduled shifts. Potentially 6,700 employees are covered.

Attorneys who represent employers contend that the increase in overtime cases is the result of plaintiff's attorneys looking for ways to exploit the 69-year-old U.S. Fair Labor Standards Act.

Attorneys for the workers contend they are trying to right a variety of wrongs -- sometimes done wittingly, sometimes unwittingly -- by corner-cutting companies trying to maximize profit.

Enough gray area exists about who is covered by the federal overtime law and who is exempt that lawyers on both sides will have steady work for years.

"If there's been a violation [of the Fair Labor Standards Act] by a half hour during lunch and you multiply that by 56,000 employees times five days a week, times four weeks a month, times 12 months a year, times X number of years, that can add up," said Dan Oberdorfer, an employment attorney for the Minneapolis firm of Leonard, Street and Deinard. "These are expensive to defend."

The Federal Labor Standards Act (FLSA) is a product of the Great Depression, created in 1938 to protect workers by setting a minimum wage and establishing an overtime system. The government used the time-and-a-half overtime provision as an incentive to get employers to offer more jobs to out-of-work Americans, as well as to reward workers for long shifts.

Nearly 4,400 FLSA lawsuits were filed in the United States last year, according to the Administrative Office of the United States Courts. That's up from 3,400 suits in 2005 and 1,961 in 2001. Not all FLSA lawsuits involve overtime issues, but many do.

Some workers exempt

The law exempts certain employees from coverage. Those positions are loosely defined as executive, administrative, professional, creative, some computer jobs and outside sales.

Beyond suits alleging that some companies forced workers to put in overtime without compensation, recent challenges to the exemptions have opened new ground for lawyers to fight over.

"Individuals are saying, 'I'd like to have that [overtime] protection. Let's test the water and see if we're covered,'" said David Larson, a professor in employment law at the Hamline University School of Law.

In federal court in Minneapolis, for instance, Caribou Coffee is defending its classification of store managers as exempt from the FLSA's overtime provisions. Attorneys representing up to 400 managers for the Minnesota-based chain argue that Caribou managers perform basically the same duties as front-line baristas and are entitled to overtime. The Caribou suit is similar to one against Starbucks in California.

White-collar lawsuits

New lawsuits are surfacing in white-collar environments as well. Sales representatives for large pharmaceutical companies have raised similar challenges to their employers' denial of overtime, as have stockbrokers and computer software engineers.

"These cases are driven by lawyers. Instead of one plaintiff they can represent hundreds, if not thousands, of individuals," said Joseph Sokolowski, an employment attorney at the Minneapolis firm of Fredrikson & Byron.

The financial implications of these overtime lawsuits has attorneys such as Sokolowski concerned. The cases can cover years of employment, and volumes of pay records have to be produced and analyzed by both sides.

While plaintiff's attorneys typically sue employers on job discrimination issues one worker at a time, wage-and-hour cases allow them to sue on behalf of schools of employees.

"Is the reward greater? Yes. But the risk is exponentially greater too," said William O'Brien, a plaintiff's employment attorney with the Minneapolis firm Miller-O'Brien-Cummins. He noted the greater amount of pretrial work that has to be done.

"Sure, plaintiffs attorneys are looking to make money," said Larson, the law professor. "But if they win, then they were right and there was a problem and it was time for correction."

"Changing Workplace Spurs More Overtime Lawsuits"

Wall Street Journal
Sept. 21, 2007
By Wendy Pollack

U.S. companies are grappling with a big upsurge in lawsuits on overtime pay, and many of the legal tussles are emerging far from the factory floor.

Cases involving so-called wage and hour rules accusing employers of failing to pay required overtime more than doubled in federal courts from 2001 to 2006. While precise figures aren't available, attorneys representing companies and plaintiffs estimate that employers have paid more than $1 billion a year to resolve overtime claims, Business Week's Michael Orey reports.

The new wage wars expose a fundamental debate about the modern workplace. Overtime laws were drafted during the Depression, aimed both at protecting factory workers and encouraging businesses to hire additional employees rather than pay existing ones more. Under exemptions to the law, businesses aren't required to pay overtime to most professionals generally workers whose jobs require independent judgment. But the distinctions between white- and blue-collar jobs have blurred over the last few decades as more tasks, even in offices, become regimented. What' s more, technology has enabled many employees to extend their work day well beyond their time at the office. Bankers used to work bankers' hours, says Jerry A. Jacobs, a sociologist at the University of Pennsylvania. But by the 1960s, he notes, professionals were putting in longer hours than traditionally working-class employees.

Although many people appear to be entitled to overtime pay they aren't receiving, few employees consider making a claim until it is suggested by an attorney, Mr. Orey reports. What's more, deeply rooted beliefs about work among college-educated professionals make many of them resistant to pursuing overtime pay.

Lawyers like Reno, Nev.-based Mark R. Thierman are working to change those perceptions. Viewed as perhaps the most successful plaintiff's attorney in the overtime field, Mr. Thierman has made his mark pursuing claims of the relatively well-paid, including computer and financial-services employees. The growing number of lawsuits has created a windfall for attorneys on both the management side and for plaintiff's attorneys like Mr. Thierman, who says his recent settlements alone total $458 million, of which he might receive tens of millions of dollars.

On October 13, 2006, a Phidelphia jury awarded $78 million against Wal-Mart Stores Inc., the world's largest retailer, to current and former Pennsylvania employees for forcing them to work "off the clock" or during rest breaks.

Wal-Mart is currently defending overtime lawsuits in over 25 states. In December 2005, a California jury awarded $172.3 million against the company for overtime violations in that state.

On September 1, 2005, Allstate agreed to pay up to $120 million to resolve overtime claims brought by claims adjusters in California

Farmers Insurance pays $210 million to settle overtime claims.

Coca-Cola paid $20 million to settle misclassification charges brought by California employees.

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Overtime Litigation in the

NewA federal court in Texas granted a nationwide stay of a new law scheduled to take effect on December 1, 2016 that would have doubled the minimum salary requirements for the main exemptions under the Fair Labor Standards Act (FLSA).

The new law would have required employers to start paying overtime to workers earning salaries of less than $47,476 a year. Previously,the threshold was $23,660, which was last updated in 2004. The court said the government had overstepped its authority by requiring that the new threshold would automatically increase every three years. The Department of Labor has filed a Notice of Appeal to the Fifth U.S. Circuit Court of Appeals.

Overtime Case Filed on Behalf of Residential Pick-Up Drivers in the U.S. District Court for the Western District of Michigan

A lawsuit claiming that Residential Pick-up Drivers employed by Everkept Disposal were paid improperly was filed by Harvey Kruse, P.C. on June 9, 2015. If you are currently employed or have worked for Everkept Disposal in the last three (3) years, contact us if you have any questions about the litigation. To participate in the lawsuit, a claim form needs to be signed. Click here to download the two page form.

President Obama Announces Overtime for Anyone Making Less Than $50,400

On June 29, 2015, in an op-ed called "A Hard Day's Work Deserves a Fair Day's Pay," Preisdent Obama stated that "nearly 5 million workers" not previously entitled to overtime will receive time-and-a-alf for each hour of work beyond 40 hours begining in 2016 whether they are hourly or have a fixed salary.

U.S. Supreme Court Rules that Mortgage Bankers are Entitled to Overtime

On March 9, 2015, the U.S. Supreme Court ruled unanimously to make mortgage bankers eligible for overtime pay under the Fair Labor Standards Act of 1938 (FLSA). Click here to read the opinion by Justice Sotomayor.

Offering to Pay all Back Overtime and Liquidated Damages Does Not Cutoff Award of Attorney's Fees

On October 11, 2013, the 11th Circuit ruled that simply paying all back overtime and an equal amount for liquidated damages did not moot a claim for attorney's fees. Defendant offered to pay all overtime claimed -- $1,800 -- plus an equal amount for liquidated damages. Plaintiff accepted but the court then approved the settlement and entered a judgement awarding $61,810.44 in attorney's fees. On appeal, the 11th Circuit held that tendering full monetary relief did not moot the FLSA case and as a result the plaintiff was entitled to her attorey's fees.

Senior Living Facility Settles for $7.5 Million

On November 15, 2013, a federal judge approved a $7.5 million settlement of a 2012 class action lawsuit under the Fair Labor Standards Act alleging that senior living operator Holiday Retirement failed to accurately pay community managers and co-managers for all hours worked.

Verizon Settles Retail Employee Overtime Case for $7.7 Million

A federal judge has approved a $7.7 million settlement of an overtime case brought by retail store employees.

Lady Gaga Settles Overtime Case with Former Assistant

A trial set for November has apparently been averted in an overtime case brought by a former assistant to Lady Gaga, who was paid a flat fee of $50,000 one year and $75,000 annually the next to be on call 24/7. According to the suit, "on-call" time potentially qualifies for overtime compensation.

Chipotle Sued for Overtime by Salaried "Apprentices"

A New York overtime lawsuit was filed against the Denver-based restaurant chain alleging that it classifies "apprentices" as managerial, salaried employees who don't qualify for overtime. The suit contends apprentices earn salaries of $40,000 but frequently work more than 40 hours a week performing the duties of hourly workers, including cooking and filling orders. Chipolte Mexican Grill, Inc. has over 1,300 locations.


U.S. Supreme Court Finds Pharmaceutical Sales Reps Exempt from Overtime

On June 18, 2012, the U.S. Supreme Court in a 5-4 decision ruled in Christopher v. SmithKline Beecham, that pharmaceutical sales representatives are exempt from the overtime requirements of the federal Fair Labor Standards Act ("FLSA"). The Court also refused to give controlling deference to the Department of Labor's change of position in interpreting the regulation to exclude these employees, which was first announced in amicus briefs. The Court noted that where, as here, an agency's announcement of its interpretation is preceded by a lengthy period of conspicuous inaction, "the potential for unfair surprise is acute."

When a Deal is NOT a Deal -- You Can't Waive Overtime by Dale R. Burmeister, Esq.

It is not uncommon to claim that a "deal is a deal" in employment cases like overtime and independent contractor lawsuits as a defense. It is often argued that the worker agreed to be classified as an independent contractor or agreed to accept a salary in lieu of overtime even though expecting to work more than 40 hours a week. In Brooklyn Bank v. O’Neal, 324 U.S. 697, 707 (1945), however, the Supreme Court held:

"No one can doubt that to allow waiver of statutory wages by agreement would nullify the purposes of the [FLSA]. [P]olicy considerations ... forbid waiver of basic minimum and overtime wages under the Act ...."

Almost 40 years later, the Court reaffirmed in Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 745 (1981), that FLSA rights are not waivable. Lower courts have obviously followed suit. See, e.g., Abbott v. Beatty Lumber Co. 90 Mich. App. 500, 504, 282 N.W.2d 369, 371, 282 N.W.2d 369 (1979)(statutory entitlement to overtime compensation may not be waived by the employee even by a collective bargaining agreement, since to do so would nullify the purposes of the FLSA); Marshall v. R&M Erectors, 429 F. Supp. 771, 780 (D. Del. 1977); Kendrick v. Alternative Care, Inc., 2006 WL 4756451 (M.D. Fla. Oct. 25, 2006); Underwood v. NMC Mort. Corp., 445 F.R.D. 720, 723 (D. Kan. 2007)(employees cannot waive their right to overtime wages); Harrington v. Despatch Indus. L.P., 2005 U.S. Dist. LEXIS 12781 (D. Mass. 2005) (even though Plaintiff’s hiring letters stated that he was an exempt employee, plaintiff did not thereby relinquish his entitlement to overtime pay).

$35 Million Settlement in Oracle Misclassification Case

A closely watched overtime misclassification case in California involving Oracle Corporation settled in November 2011 for $35 million. The class was made up of 1,725 technical support, quality assurance, and project management workers. In 2006, IBM agreed to pay $65 million to settle a federal class-action suit on behalf of 32,000 employees making similar claims.

The Department of Labor’s New Position on Fluctuating Work Week Makes it More Likely that Misclassified "Salaried" Employees Will be Paid Time-and-a-Half

On April 5, 2011, the DOL announced a new interpretive position on the fluctuating workweek in a rule entitled, “Updating Regulations Issued Under the Fair Labor Standards Act.” It said that “the payment of bonus and premium payments ... [is] incompatible with the fluctuating workweek method of computing overtime under section 778.114.” The DOL recognized that “[t]he basis for allowing the half-time overtime premium computation under the fluctuating workweek method is the mutual understanding between the employer and the employee regarding payment of a fixed amount as straight time pay for whatever hours are worked each workweek, regardless of their number,” but determined that using the fluctuating workweek method of calculating overtime where an employee has received bonus or premium payments is “inconsistent with the requirement of a fixed salary payment set forth by the Supreme Court in Overnight Motor Transport v. Missel," citing several court decisions to bolster its position.

U.S. Department of Labor Releases Overtime Calculator for iPhones

On May 23, 2011, the U.S. Department of Labor's wage calculator app was released and allows workers who suspect their employers of shorting them on wages to track their regular hours, break time and any overtime hours. To get it, just go to the Apple App Store and search for DOL. It is free and is very easy to use.

The free wage calculator app, called DOL-Timesheet, was released for the iPhone and iPod Touch. The Labor Department said it would eventually release versions of its wage calculator for other smartphone platforms, such as Android and BlackBerry.

U.S. Supreme Court Employee Trifecta -- High Court Sides with Employees in Two Retaliation Cases and a Discrimination Case in 2011 So Far

On January 24, 2011, the United States Supreme Court ruled in Thompson v. North American Stainless that Title VII of the Civil Rights Act prohibits employers from retaliating against employees who complain of discrimination by terminating the employment of closely related third-parties, such as spouses or family members. Title VII’s anti-retaliation provision covers a broad range of employer conduct and therefore is not limited to discriminatory actions affecting the terms and conditions of employment. It also prohibits employers from taking action that might dissuade a reasonable worker from making or supporting a charge of discrimination. The Court held a reasonable employee would likely be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.

On March 1, 2011, the U.S. Supreme Court ruled in Staub v. Proctor Hospital that if an employee or former employee can show that any of the supervisors involved in the line that lead to the ultimate employment action at issue, had a discriminatory intent or animus in their actions, then the action of that supervisor can form the basis for the employer's liability. It no longer matters that the non-decision-maker did not have power or control over the decision-maker. It also does not matter that the decision-maker made an independent review and analysis of the grounds for the adverse employment action if the supervisor holding the discriminatory animus was anywhere in the line that led up to the ultimate employment action. Employing the so-called “cat’s paw” theory of employment discrimination -- that an employer can be liable for the discriminatory animus of an employee who influences, but does not make, an ultimate employment decision – the Court held that “if a supervisor performs an act motivated by . . . animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable . . . .”

On March 22, 2011, the Court decided Kasten v. Saint-Gobain Performance Plastics Corp. In Kasten, the Court found that oral employee complaints alleging violations of the Federal Labor Standards Act need not be in writing to receive anti-retaliation protection. In a 6-2 decision, the Court interpreted the statutory phrase "filed any complaint" to include oral complaints. Reasoning that a narrower interpretation limited to written complaints would not further the remedial purpose of the Act, the Court ruled that oral complaints could be "filed" for purpose of anti-retaliation protection if properly made. Thus, the Court held that if an oral complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of [employees'] rights protected by the statute and a call for their protection,” such an oral complaint may be protected by the FLSA.

U.S. Supreme Court Lets Stand Decision that Thousands of Pharmaceutical Sales Reps Entitled to Overtime

On Feb. 28, 2011, the U.S. Supreme Court denied Novartis Pharmaceuticals Corporation's petition for certiorari, thereby refusing to disturb the liability judgment against Novartis issued by the Second Circuit in In re Novartis Wage & Hour Litigation, 611 F.3d 141 (2010). The Second Circuit held that thousands of U.S. sales representatives employed by Novartis are entitled to overtime pay because they are not subject to either the "Outside Sales" or "Administrative" exemptions to overtime compensation. The Second Circuit agreed with the U.S. Secretary of Labor, who filed an amicus brief supporting the position that two exclusions to overtime pay – the Outside Sales and Administrative exemptions – did not apply to Novartis's Reps.

Quicken Loans Prevails in Overtime Trial Involving Mortgage Bankers in Detroit

Trial started on February 8, 2011 in U.S. District Court in Detroit involving over 300 employees of Quicken Loans working in call centers in Michigan and Ohio to determine whether they are entitled to overtime under Federal law. Quicken Loans contended that the employees were "bankers" on a salary and are exempt from overtime pay. The Plaintiffs asserted that they were not really bankers but primarily engages in "sales," making 80 or more calls a day and regularily working 60 to 70 hours per week. The trial lasted almost two months and the jury returned a verdict for Quicken Loans. Plaintiffs' attorneys plan to appeal.

Dick's Sporting Goods Pays $15 Million to Settle
Overtime Case

According to the Wall Street Journal on February 1, 2011, Dick's Sporting Goods has agreed to a $15 million settlement of a class-action lawsuit and 22 related state lawsuits brought by current and former employees who were required to work through breaks and were not paid overtime. See article.

Purple ckOvertime Suit Filed Against Ameritech Publishing on Behalf of Yellow Pages Call Center Employees in Michigan

On October 22, 2010, a lawsuit was filed by four (4) call center employees of Ameritech Publishing, Inc. in U.S. District Court in Detroit alleging that up to three (3) years in unpaid overtime is owned. The case has been assigned to Judge Gerald E. Rosen. To see a copy of the Complaint, click here.

Already, over 70 employees have opted in to the litigation by filing a one page "Consent Form" and filing out a one page information sheet.

"Level One" Managers Overtime Case Filed Against Michigan Bell in Detroit

On March 10, 2010, a Complaint was filed in U.S. District Court in Detroit claiming that Michigan Bell has a company-wide policy that misclassifies a class of "First Level Managers" as exempt from overtime compensation. In a nutshell, the claims are that "First Level" or "Level One" Managers often work more than 40 hours per week (sometimes up to 70 hours), but do not receive overtime compensation for that work and that they are frequently “on-duty” on a rotating basis, which means they must be available to go into the field 24 hours per day. On weeks when they are on-duty, First Level Managers could work anywhere between 20 hours to 70 hours per week more than their usual schedule according to the Complaint.

To learn more about this case, call Dale Burmeister or Jason Mathers at 248.649.7800.

Second Circuit Rules that Pharmaceutical Sales Reps -- Some Making $100,000 a Year with Commissions -- Entitled to Overtime

On July 6, 2010, the United States Court of Appeals for the Second Circuit found that current and former sales representatives of a pharmaceutical company were neither exempt outside sales people nor exempt administrative employees.

The Court found that the salespeople were promoting sales of other, not making sales themselves. Thus, these employees primary duty was not making sales away from the employer’s place of business.

The Court also found that the sales representatives only performed low level marketing functions. Even though they had some authority to enter into agreements which bound company and had some discretion, the Court found the employees’ duties were not sufficient to make them exempt administrative employees under the FLSA.

Read the opinion here.

Hopital chain agrees to pay up to $8.5 million for failing to pay overtime for working through lunch

In June 2010, Beth Israel Deaconess Medical Center and other CareGroup Inc. affiliates agreed to settle a class-action lawsuit against the hospital chain alleging that workers were not paid for working through lunch breaks or beyond their scheduled shifts. The $8.5 million settlement, if given court approval, will cover as many as 9,000 current and former CareGroup employees.

Wal-Mart Stores, Inc. agrees to pay up to $86 million to settle a class-action lawsuit accusing it of failing to pay overtime

On May 12, 2010, Wal-Mart agreed to pay a minimum of $43 million and as much as $86 million to resolve a class action involving failure to pay overtime wages to former employees of its California stores. The settlement is separate from earlier settlements to pay as much as $640 million to settle 63 federal and state class-action lawsuits alleging it deprived workers of wages reached in 2008. Likewise, this settlement has no affect on a December 2009 case in which Wal-Mart agreed to pay $40 million to settle a class-action lawsuit over wages in Massachusetts. For more information, click here.

Staples Settles Overtime Case for $42 million

Staples Inc., the office supply retailer, announced on January 29, 2010 that it reached a $42 million settlement in several class-action lawsuits claiming that it had not paid its assistant store managers overtime to which they were entitled. A court must approve the settlement, which covers more than 5,500 current and former Staples employees. The settlement resolves claims dating back as far as 2002 and includes an agreement by Staples to drop an appeal of a verdict against it last year in New Jersey.

Wal-Mart Settles Wage & Hour Case for $54 Million

Facing $2 billion in potential liability in a Minnesota wage-and-hour class action, Wal-Mart has agreed to a $54.3 million settlement with a class of about 100,000 current and former Wal-Mart
workers in the state. A hearing for court approval of the settlement is set
for January 14, 2009. See the piece in column 1 about the case when it was just getting started.

FedEx Agrees to Pay $27 Million to Settle Misclassicifation of Drivers as Independent Contractors

FedEx Corp.'s ground unit has agreed to pay about $27 million to settle a lawsuit accusing it of misclassifying about 200 California drivers as independent contractors.

Sun Microsystems Settles Overtime Litigation for $5 Million

On July 20, 2010, Sun Microsystems agreed to pay $5 million to 152 technical writers who sued it for not paying them for working overtime or during meal breaks. The lawsuit challenged a company policy of classifying the writers, who often worked 60 hours or more a week and produced technical documents and information manuals, as professionals exempt from overtime laws.


FASTENAL Settles Overtime Litigation for $10 Million

Fastenal Co. agreed on August 29, 2008 to make a cash payment of $10 million as part of a preliminary settlement to a class action lawsuit that related to the calculation of earned overtime wages for certain of its former assistant general managers.

Employees Allege AIG Misclassified Hundreds of Clerical Workers to Avoid Overtime Payments

FLSA collective-action suit brought by Saltz, Mongeluzzi, Barrett & Bendesky P.C. and Sidney Gold & Associates, P.C.
September 19, 2007: 09:00 AM EST

CAMDEN, N.J., Sept. 19 /PRNewswire-USNewswire/ -- Two insurance adjusters employed by AIG, Inc. , the nation's largest property and casualty insurer, have filed a collective action under the Federal Fair Labor Standards Act ("FLSA"), it was announced today. The lawsuit asserts that AIG intentionally misclassified hundreds of clerical employees as exempt from federal overtime requirements.

The FLSA was enacted to protect non-supervisory workers from wage-and-hour abuses. The Plaintiffs, residents of New Jersey, contend that they were not executive, administrative, or professional employees as defined by the FLSA and, as a result, should have been paid at least one-and-one-half times their regular hourly rate for working more than 40 hours in a given work week. The suit, filed September 6, 2007 in the United States District Court for the District of New Jersey, seeks damages for all similarly-situated AIG employees including unpaid overtime since January 2001, liquidated damages, and interest.

"AIG appears to have knowingly and willfully denied Plaintiffs and their colleagues overtime pay for no other reason than to improve its bottom line," says David J. Cohen, attorney for the Plaintiffs and head of SMBB's class action group. "We intend to shed light on AIG's illegal conduct and seek the maximum recovery for its hard working men and women."

"I am committed to AIG's customers and to the company," says named plaintiff Sandy Dorofy, "but I also believe in getting an hour's pay for an hour's work and earning overtime pay for the overtime hours I worked."

Several major insurers have settled overtime pay litigation in recent years. Allstate Corp. agreed to pay as much as $120 million to settle allegations it denied California workers overtime pay in violation of FLSA. State Farm Insurance Exchange reportedly agreed to pay more than $200 million to settle a FLSA suit by its claims adjusters. In both cases, the companies denied any FLSA violations.

About SMBB

With offices in Philadelphia and Media, Pennsylvania and Voorhees, New Jersey, Saltz, Mongeluzzi, Barrett & Bendesky, P.C. is dedicated to the representation of people who have suffered serious physical and economic injuries. SMBB opened its class action practice group in 2007 with the hiring of several highly-skilled litigators with extensive experience in the handling of antitrust, consumer, employment and securities cases. SMBB also enjoys a national reputation in the litigation of complex construction and workplace accident, medical malpractice, products and premises liability, and civil rights cases. For further information call (215) 496-8282 or visit

About Sidney L. Gold & Associates, P.C.

Sidney L. Gold & Associates, P.C., based in Philadelphia, has been recognized by the Martindale-Hubbell Bar Register as a preeminent law firm in the field of employment law and civil rights litigation. The Firm is exclusively concentrated in the representation of both employees and employers in all aspects of employment related litigation, including claims under federal and state anti-discrimination laws and federal civil rights laws. The Firm's lawyers have has significant experience in the representation of both private and public sector employees and employers. For further information call (215) 569-1999 or visit


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According to an article in the National Law Journal, "the government's recent attempt to reduce overtime lawsuits has thrown the doors wide open for still more litigation, according to labor attorneys across the country who argue that the 7-month-old federal overtime laws are roiling the workplace." read more

The official Department of Labor site is designed to help employers and employees understand the Department's new rules.  Click here to go to the site.

It's More Than Just Your Title --
The Four Executive Exemption Criteria

According to the Fair Labor Standards Act, the management or executive exemption to the overtime pay requirements includes four criteria, all of which must be met:

1. The employee is paid on a salary basis, at least $455 per week (or $23,660/year)

2. The employee’s primary duty must be management. In other words, the employee either manages the company as a whole or a recognized department or subdivision

3. The employee regularly directs the work of at least two full-time employees or their equivalent; and

4. The so-called manager has either actual hiring and firing authority, or at least substantial input into hiring, firing, retention, and promotion decisions.

With three offices and over 30 litigators handling cases all over the country, we can help you. Our attorneys include members of

  • The State Bar of Michigan
  • The American Trial Lawyers Association
  • The Association of Defense Trial Counsel
  • The Defense Research Institute

In addition to admissions to various courts across the United States, our lawyers are also admitted to practice before

  • The Michigan Supreme Court
  • The Michigan Court of Appeals
  • All Circuit and District Courts in Michigan
  • The United States Court of Appeals for the Sixth Circuit
  • The United States District Court for the Eastern District of Michigan
  • The United States District Court for the Western District of Michigan

Other Recent Articles in the News on Overtime Litigation

"Overtime Pay For E-Mails? Lawsuits Continue"

"At Least Three Companies Have Been Sued for Overtime Pay by Employees Who Checked E-Mail After Hours"

Aug. 20, 2009

I'm convinced there are just two types of workers: Those who clock out physically and mentally each evening and weekend, and those who check their work e-mail after hours.

A 2008 Pew Internet & American Life Project report found that 50 percent of U.S. employees who use e-mail on the job check their work e-mail on weekends and 34 percent do so while on vacation.

Isabel, a part-time hourly employee at a community college in Miami, is one of those workers. She spends at least 30 to 40 minutes each weekday checking work-related e-mail and answering calls off the clock, despite the fact she isn't paid for the time.

Looking for career advice? Click here to send Michelle your questions and they might end up as a topic for her next column.

"With BlackBerrys and other PDAs so prevalent, full-time and salaried staff are constantly communicating," she said. "If I don't check e-mails, I feel that I'm holding up processes, delaying decisions or out of the loop."

Unfortunately for employers, today's 24/7 work world and the proliferation of smart devices among lower-level workers has ushered in a new type of wage dispute: whether hourly employees who answer work-related e-mails and phone calls after clocking out for the day should be reimbursed for their time.

In July, several ex-employees of T-Mobile sued for overtime they claimed they were owed for being forced to reply to work e-mails after hours on phones provided by the company. A T-Mobile spokesperson said the company complies with wage and hour laws and doesn't comment on pending litigation.

Earlier this year, a maintenance worker sued property management firm CB Richard Ellis for wages he said he was owed for being required to check his company BlackBerry after hours.

In court documents, CB Richard Ellis admitted to giving some of its maintenance workers PDAs but denied the overtime complaints, saying that the worker's claim was beyond the statute of limitations and that the company believed it had acted in accordance with federal labor laws.

And in 2008, Verizon Communications was sued for overtime wages by a personal account manager (a.k.a., a customer service rep) contracted through an employment agency who had agreed to work "on call" 72 hours a week using a company phone. In court documents, Verizon denied the overtime complaint, arguing that the worker failed to notify Verizon of her overtime hours and that the company had acted in accordance with the law.

A Verizon spokesperson said the company does not comment on pending litigation.

"Wage Wars
Workers -- from truck drivers to stockbrokers -- are winning huge overtime lawsuits

Business Week
October 1, 2007
By Michael Orey

There's a place in Reno, Nev., that practically mints money. It's not one of the many casinos in town. Nor is it one of the legal brothels that operate in the area. It is a law firm, located in a wing of a private home nestled in the foothills of the Sierra Nevadas. From a utilitarian office, with a view of horses grazing in a neighbor's paddock across the road, attorney Mark R. Thierman pursues a practice that in recent years has won his clients hundreds of millions of dollars from some of the biggest names in Corporate America and produced tens of millions for himself.

A Harvard Law School grad, Thierman, 56, spent the first 20 years of his career as a management-side labor attorney and self-described union buster. He has been pelted with eggs by construction workers and his tires have been slashed by longshoremen. But in the mid-1990s he brought a series of cases on behalf of workers in California and established himself as a trailblazer in what had long been a sleepy, neglected area of the law. Thierman sues companies for violating "wage and hour" rules, typically claiming they have failed to pay overtime to workers who deserve it. Since the beginning of this decade, this litigation has exploded nationwide. Because wage and hour laws have been so widely violated, undetonated legal mines remain buried in countless companies, according to defense and plaintiffs' lawyers alike.

No one tracks precise figures, but lawyers on both sides estimate that over the last few years companies have collectively paid out more than $1 billion annually to resolve these claims, which are usually brought on behalf of large groups of employees. What's more, companies can get hit again and again with suits on behalf of different groups of workers or for alleged violations of different provisions of a complex tapestry of laws. Framed on the wall of Thierman's office, for example, is a copy of a check from a case he settled for $18 million in 2003 on behalf of Starbucks (SBUX ) store managers in California. But the coffee chain is currently defending overtime lawsuits, filed by other attorneys, in Florida and Texas. Wal-Mart Stores (WMT )is swamped with about 80 wage and hour suits, and in the past two years has seen juries award $172 million to workers in California and $78.5 million in Pennsylvania.

"This is the biggest problem for companies out there in the employment area by far," says J. Nelson Thomas, a Rochester (N.Y.) attorney, who, like Thierman, switched from defense to plaintiffs' work. "I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that [a wage and hour suit] will." Steven B. Hantler, an assistant general counsel at Chrysler, says plaintiffs' lawyers are "trying to make all employees subject to overtime. It's subverting the free enterprise system."

In overtime cases, Depression-era laws aimed at factories and textile mills are being applied in a 21st century economy, raising fundamental questions about the rules of the modern workplace. As the country has shifted from manufacturing to services, for example, which employees deserve the protections these laws offer? Generally, workers with jobs that require independent judgment have not been entitled to overtime pay. But with businesses embracing efficiency and quality-control initiatives, more and more tasks, even in offices, are becoming standardized, tightly choreographed routines. That's just one of several factors blurring the traditional blue-collar/white-collar divide. Then there's technology: In an always-on, telecommuting world, when does the workday begin and end? The ambiguity now surrounding these questions is tripping up companies and enriching lawyers like Thierman.

About 115 million employee - 86% of the workforce - are covered by federal overtime rules, according to the U.S. Labor Dept. The rules apply to salaried and hourly workers alike. Plenty of wage and hour lawsuits are filed on behalf of the traditional working class, be they truckers, construction laborers, poultry processors, or restaurant workers. But no one has been more successful than Thierman in collecting overtime for employees who are far from the factory floor or fast-food kitchen. His biggest settlements over the last two years have been on behalf of stockbrokers, many of whom earn well into the six figures. Thierman has teamed up with other lawyers to extract settlements totaling about a half-billion dollars from brokerage firms, including $98 million from Citigroup's (C ) Smith Barney and $87 million from UBS Financial Services Inc. (UBS ) (As is typical in settlements, the companies do not admit liability.) With those cases drawing to a close, he and other attorneys already are pursuing new claims on behalf of computer workers, pharmaceutical sales reps, and accounting firm staff.

As Thierman sees it, these are the rank and file of a white-collar proletariat. "In the 1940s and 1950s," he writes in an e-mail, "a large portion of American workers who were protected by overtime laws seem to have been forgotten as inflation drove up the absolute (not the relative) amount of compensation, and the bulk of workers began wearing sports coats and processing information instead of wearing coveralls and processing widgets." In a subsequent interview he says: "I'm interested in the middle class those are my folks."

The core wage and hour law, the federal Fair Labor Standards Act (FLSA), has been on the books since 1938. The New Deal statute, which mandated that a broad swath of the workforce receive 90 minutes' pay for every hour worked beyond 40 in a week, had two goals. One was to reward laborers who put in long hours. But another was to expand employment by making it cheaper for companies to hire additional workers than pay existing ones time and a half. This penalty, Thierman argues, is ineffective today, given the enormous costs of health care and other benefits for each employee. The result, he says, is that businesses prefer to require long hours, and they either pay overtime or not and hope they don't get caught.

Of course, not everyone is entitled to overtime. Under "white-collar exemptions" to the law, employers don't have to pay extra to various executives and professionals. These exemptions, labor historians say, are rooted in decades-old thinking about a workforce that bears little resemblance to today's. A clear distinction between professional and production classes used to be assumed. Nowadays mortgage brokers, for instance, crank out loan applications in assembly line operations and are paid based on how much they produce. Lenders around the country have battled, largely unsuccessfully, to defeat overtime claims by these employees.

Then there's the notion that white-collar jobs are cushier and pay more. "Bankers used to work bankers' hours," notes Jerry A. Jacobs, a sociologist at the University of Pennsylvania. But, he notes, the tendency of working-class employees to put in longer hours than professionals flipped by the 1960s. Consider pharmaceutical sales reps. While they make an average of $79,000 a year, their jobs require them to work about 65 hours a week, says Charles Joseph, a New York attorney who, along with others, has filed overtime cases against every major drugmaker. In order to earn a middle-class income, he observes, they essentially "have to work two jobs."

Beth Amendola would agree with that. She is suing Bristol-Myers Squibb Co., where she worked as a sales rep in South Florida from 1998 to 2006. Often called on to attend evening programs and medical meetings, Amendola and her colleagues would say, "Oh, another hour, another 25 cents that was the standard joke." A Bristol spokesman says the company believes it complies with the FLSA, and won't comment on pending litigation.

While the Bush Administration updated regulations governing white-collar exemptions in 2004, attorneys say the changes were incremental and left plenty of room for lawsuits. There are two basic categories of overtime claims. One arises because a company has misclassified employees as exempt from the wage and hour laws, and thus improperly failed to pay overtime. In some of these cases the workers have been classified as independent contractors, meaning the company doesn't pay them benefits, either. The second is a so-called off-the-clock claim, in which employees allege that some of the work they do is not recorded by the company, sometimes as an intentional way to keep them from accruing overtime.

Even defense attorneys acknowledge that vast numbers of companies are violating the law. "Industries long steeped in tradition as to who is exempt and who is not exempt...are not necessarily compliant with the letter of the regulations," says Kirby C. Wilcox, a partner at Paul, Hastings, Janofsky & Walker in San Francisco. Indeed Thomas, the former defense attorney, says he switched sides after representing an employer in a wage and hour case. "I was amazed at how prevalent the violations were and the size of the settlement," says Thomas, who co-founded his own firm, Dolin, Thomas & Solomon, in 2000. "I said to myself, Boy, I'm really on the wrong side here.'"

The proliferation of cases\more than doubling in the federal courts from 2001 to 2006\at first drew little notice in the business community, but that's changing. "Everybody's talking about it," says Robin S. Conrad, head of the litigation arm of the U.S. Chamber of Commerce, which recently began filing briefs in cases in support of companies.

While violations appear widespread, employees themselves rarely think to make wage and hour claims. Instead, they usually have it suggested to them by lawyers. "Ninety-five percent of our wage and hour cases are a result of someone coming to us complaining about something else," says Thomas. "I can't tell you how many people have come into our office with employment disputes that are meritless and would be thrown out of court and walk out with an FLSA claim."

So deeply rooted are archaic workplace stereotypes that many college-educated, white-collar workers are resistant to the idea that they are entitled to overtime. They associate it with a labor pool that is valued for brawn rather than brains. The notion of keeping track of their hours so they can get paid for long weeks strikes them as defenseless.

Scores of plain tiffs' firms are now aggressively pursuing overtime cases, but it is Thierman whom defense lawyers consistently cite as the most successful and innovative in the business. "He seeds the clouds," and others collect the rain, says defense attorney Wilcox. Thierman has particularly made his mark in pursuit of claims on behalf of relatively well-paid workers.

Tall with wavy gray hair, Thierman is a bit of an iconoclast and calls himself a libertarian. He works with just a couple of assistants. A dog (Yoda) and a cat (Obi Wan) wander in occasionally for attention. At one point in the late 1980s, Thierman thought about quitting the law altogether, and, as documented by a framed certificate in his office, became a registered hypnotherapist. He owns a vacation home in Venezuela. He and his wife, who have three grown children, moved from San Francisco to Reno six years ago, and he contemplated semiretirement. Then his wage and hour practice took off.

The bulk of Thierman's cases involve claims of misclassification. In the case he settled against Starbucks in 2003, Thierman contended that merely giving employees the title of store manager or assistant manager doesn't make them "executives," who are exempt from overtime. A majority of their work, he argued, was making lattes and Frappuccinos, just like the lower-ranking, and overtime-eligible, baristas. (A Starbucks spokeswoman says it is the company's policy to comply with overtime laws.) This is the same approach he is now pressing against a wide range of other companies on behalf of employees who would widely be viewed as white-collar. His focus is on what they actually do, not on their job titles, income, or academic degrees. "You don't have to be stupid to get overtime," Thierman says. "In fact you're stupid if you don't get overtime."

Computer workers of various stripes, for example, have commonly not been paid for their extra hours. In a sop to the IT industry, lawmakers exempted such employees, who tend to be well-educated, well-paid, and have a culture of working virtually round the clock. The companies argued that they would otherwise not be able to remain competitive with foreign rivals. But under California law, the exemption applies only for workers whose primary function involves "the exercise of discretion and independent judgment." In numerous lawsuits, Thierman and other plaintiffs' attorneys have alleged that legions of systems engineers, help desk staff, and customer service personnel do no such thing. Of programmers, Thierman says, "Yes, they get to pick whatever code they want to write, but they don't tell you what the program does.... All they do is implement someone else's desires."

Already the settlements are rolling in. Siebel Systems (ORCL ) has agreed to pay $27.5 million to about 800 software engineers, and IBM (IBM ) is forking over $65 million to technical and customer support workers. Thierman says he also plans to go after other big employers of computer personnel, including banks and health insurers.

Stockbrokers are highly compensated and have long been presumed to be exempt, but Thierman caught financial services firms by alleging a technical violation of the law: To be treated as exempt, employees must receive a salary, and brokers have generally received only commissions. Although they deny liability, a parade of firms has settled after facing one of Thierman's suits, including Merrill Lynch, Morgan Stanley, and A.G. Edwards. Under a complex formula, most brokers received about $30,000 after attorneys' fees, Thierman says. An industry trade group, the Securities Industry & Financial Markets Assn., notes in a statement that the Labor Dept. issued an opinion letter in November, 2006, which stated that brokers are exempt. The letter, however, came too late to help firms that have already settled, and it isn't binding in court.

In some of his lawsuits, Thierman has made off-the-clock claims on behalf of lower-wage employees. For instance, in a suit on behalf of employees of Hollywood Video stores, a movie rental chain, he alleged workers had to boot up the computer before they could punch in, and had to punch out before they could close the register for the night and do the store tally. He used store surveillance cameras to document the time spent on these tasks, settling the case for $7.2 million.

Nearly all of the cases faced by Wal-Mart are off-the-clock claims, with allegations that employees worked through lunch breaks without pay, or were forced to punch out when the store closed but then continue with tasks such as restocking shelves. Store managers are under constant pressure from Wal-Mart headquarters to keep wages down, says attorney Michael Donovan, who won the $72.5 million verdict against the retailer in Philadelphia last year. The easiest way to control wages, he says, is to prevent workers from logging overtime. "We're finding that that's a common pattern in large retail operations where a store manager's compensation is based in part on the profitability of their store," says Piper Hoffman, a New York attorney who has filed similar suits. John Simley, a spokesman for Wal-Mart, says the notion that the retailer doesn't pay people for overtime is "simply not true." Simley says that Wal-Mart will appeal the $172 million California verdict. He also notes that the company has persuaded courts to reject numerous class actions.

There are many variations on the off-the-clock theme. In June, Bank of America was sued in Florida by an employee who alleges that her branch manager deleted the amount of overtime she logged from the bank's records in order to receive a branch productivity bonus. A BofA spokeswoman says there is no basis for the complaint.

The issue of when the workday begins can get complicated. Delivery truck drivers, utility workers, and service technicians, for example, now regularly download their route assignments or appointments from their homes by computer each morning. Should they be paid for this time? Should this be the start of their workday? The same questions arise for white-collar workers. Daniel J. McCoy, an attorney at Fenwick & West in Mountain View, Calif., says that 15 years ago he would have presumed that a person who checked her e-mail remotely or who telecommuted had the type of job that would not be eligible for overtime. "That's less and less true today," he says. He gives the example of his own assistant, who sent McCoy an e-mail on a Sunday. McCoy said he promptly told his assistant that he didn't need to be working on a weekend, but that if he was, he had to be sure to record his time, since he is covered by wage and hour laws.

Management-side attorneys like McCoy are certainly cashing in on the wage and hour lawsuit boom. But they can only look with astonishment and envy at what plaintiffs' attorneys are now making in this area. Thierman says his recent settlements alone total $458 million. Attorneys fees are about 25% of that, and Thierman usually splits his take with various co-counsel on each case. While he won't say how much he's due to receive from these cases (and courts must still approve the fees in some of them), he doesn't dispute that it's in the low tens of millions.

In a friend-of-the-court brief filed in a case in August, the U.S. Chamber of Commerce decried the "FLSA litigation explosion" and its having become the "claim du jour" for plaintiffs' attorneys. Thierman shrugs at such concerns. The alternative, in his view, would be to have the laws enforced by a government bureaucracy. "Somebody's got to regulate this stuff," he says, "and I think the bounty hunter system works just fine.

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